Buying a house may be at the back of your mind now, but it’s one of those you’ll probably have to consider at some point. Sure, you’ve just spent thousands on a degree, but being an adult means never being far away from a big purchase. The best thing is to start early, so we’ve got some ways you can start saving for a house deposit as a student.
Being a student is pretty synonymous with not having a lot of money, particularly with the current cost of living crisis. However, saving what you can for your future is still valuable, if not more important than ever. With a mild recession on the way, the future is pretty uncertain, so students building up their savings really isn’t a bad idea. One thing you could definitely use is that money for buying a house.
Let’s face it, renting is often a money pit and landlords don’t always have the best reputation. You may have already found that out with your student accommodation, or perhaps you were one of the luckier ones. Renting doesn’t give you a lot of freedom other, but it’s inevitable that you’ll have to do it at some point. Minimise your time as a tenant by opening a savings account as a student and start saving now. You’ll thank yourself later.
How To Save For A House Deposit
Typically, house deposits are between 10 and 20 per cent of the total house price. Now, it’s very unlikely that you’ll know exactly what mortgage you’ll be accepted for. However, it’s also very unlikely you’ll be able to build enough savings for a house by the time you finish university. The trick is to start saving now and then assess it later on when you have a nice chunk. Worst case scenario you’ve saved more than 20 per cent and you’ve got some extra cash.
Not to be the bearer of bad news, but that’s probably not going to happen.
Accepting that it’s going to be a long process is the first tip. No matter how many takeaway coffees you cut down on or start bringing lunch in from home, saving that kind of money takes years. Sure, both of these things will help, but just don’t go thinking you’ll have that money by the end of the year.
Secondly, for the time being, just save what you can. It’s unlikely that you’ll be able to put hundreds of pounds away each month, especially with the way things are going, but every bit really does help. The biggest thing is commitment. Even if it’s just £10 a week, or even a month for the time being, you’re still making an effort to build your savings. It won’t be until you’re working full-time that you’ll be able to put some serious money away, but this means you won’t be starting on zero.
Build Up Savings With Your Student Loan
That being said, use your student loan to your advantage when saving for a house deposit. No, it’s not exactly free money, but you really have to consider whether you’ll ever have to pay it all back or not. That’s why you should always take any money from the government that you’re entitled to, even if you don’t currently need it. Anything spare you can put away and it’s not dipped into your own money.
In Wales, students get the same amount of money regardless of their household income or what student accommodation they use. If that applies to you, then you could have a decent chunk of money coming your way, particularly if you decide to stay at home for university or go into a house/flat share. It’s tempting to spend it all on a holiday, and sure, definitely use some of it – but if you can a bit of it back each year then you’ll be well on your way to saving for a house deposit.
Unfortunately, it doesn’t quite work like that in England, but that doesn’t mean you won’t have a little spare each time your student finance comes in.
A Lifetime ISA
Unfortunately, the government stopped new applicants for the Help To Buy ISA a few years ago. This was a scheme that meant first-time buyers would receive an additional 25 per cent on top of their deposit from the government.
It was a bit of a blow to anyone that missed out, but there’s actually a scheme very similar in place called a Lifetime ISA. With this, you can save up to £4,000 a year up until you’re 50, with the government potentially adding up to £1000 per year. The only real difference between the Lifetime ISA and the Help To Buy is that you can use the new ISA for more than just buying your first home.
To open it, you have to be between 18-40. There are a few terms and conditions to using it for saving for a house deposit, but it’s mostly that it’s not a second property or over the threshold amount.
What’s even better is that if you think you’ll probably be buying a house with someone else, then they can use their own Lifetime ISA too. Unfortunately, quick a lot of banks don’t offer a Lifetime ISA, but you can open one with sites such as moneybox.
Saving for a house deposit is never easy and takes commitment and sacrifice. However, the payoff is well worth it. Building your savings as a student is great for helping to fund your future, as well as get into good money habits.
For the time being, don’t worry too much about how much you’re saving, just that you’re making the effort. If you start now, you’ll be more than glad later on in life, even if you only managed to save little.